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Do Household Consumption and Saving Preferences Vary Between Birth-Year Cohorts in Turkey?

Author

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  • Evren Ceritoglu

Abstract

We analyze consumption and saving preferences of birth-year cohorts with respect to age groups and income definitions in Turkey. For this purpose, we develop a pseudo-panel data set based on birth-year cohorts using sixteen consecutive Household Budget Surveys (HBS), which are prepared by the Turkish Statistical Institute (TURKSTAT) from 2003 to 2018. Our empirical analysis reveals that there is a positive and significant relationship between the growth of cohort consumption and the growth of cohort income. Moreover, the direction of this relationship is robust to the definition of income. Our empirical findings suggest that the marginal propensity to consume (MPC) out of current income is slightly higher than the MPC out of permanent income among birth-year cohorts. We find notable fluctuations in the estimated MPC rates only when we classify birth-year cohorts according to age groups. Therefore, we conclude that consumption and saving preferences of birth-year cohorts vary significantly according to age groups.

Suggested Citation

  • Evren Ceritoglu, 2020. "Do Household Consumption and Saving Preferences Vary Between Birth-Year Cohorts in Turkey?," Working Papers 2015, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:2015
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2020/20-15
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    More about this item

    Keywords

    Household consumption and saving preferences; Birth-year cohorts; Pseudo-panel; Marginal propensity to consume;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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